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Senator Warns of a ‘Crisis’ in Pentagon Cost Overruns

WASHINGTON — The chairman of the Senate Armed Services Committee on Tuesday declared that cost overruns for Defense Department weapons had “reached crisis proportions,” after government auditors reported that the projected final cost of the Pentagon’s major programs had ballooned $295 billion over initial budget estimates.

The chairman, Senator Carl Levin, Democrat of Michigan, also said that he would propose a law creating an independent director of cost assessment at the Pentagon. Mr. Levin said there was a need for stronger evaluation of whether contractors were making unrealistic promises to get programs started, ensuring later overruns and delays.

“It’s going to take a fundamental change in the structure and the culture of the acquisition system to address that problem,” Mr. Levin said at a committee hearing on the cost overruns.

Testifying before the committee, the Pentagon’s top procurement officer, John J. Young Jr., reserved judgment on Mr. Levin’s proposal, saying he needed more time to study it.

The Defense Department has long struggled with overruns and delays stemming from a variety of causes, including unduly optimistic initial estimates and costly changes requested in the midst of a program.

But the system is growing worse, according to a report earlier this spring by the Government Accountability Office.

In 2000, for example, the projected cost of the Pentagon’s 75 major weapon programs was $42 billion, or 6 percent, over initial budgets, and the average delay before initial deliveries of the systems was 16 months. By 2007, with 95 major weapons programs on the list, projected cost inflation had swollen to $295 billion, or 26 percent over early estimates, and the average delay had stretched out to 21 months.

One of the problems, Mr. Levin noted, is that estimated unit costs for the Air Force’s F-35 Joint Strike Fighter have grown by nearly 40 percent per plane, costing taxpayers billions of extra dollars.

Senator Claire McCaskill, Democrat of Missouri, called the overruns “sickening” and “unacceptable,” adding, “This would never be tolerated in the private sector.”

Adding to the dismal portrait, Bloomberg News on Monday reported that Pentagon auditors had uncovered flaws in Lockheed Martin Corporation’s system for tracking costs and schedules for the Joint Strike Fighter program, rendering the data “useless” or “suspect” for identifying future problems before costs swell.

Lockheed Martin had agreed to a series of monthly milestones it must meet to correct the flaws, Mr. Young said. If it misses a milestone, he added, the government will withhold $10 million owed to the company.

Mr. Young, who took over defense acquisitions last year, won praise from the senators for his efforts to bring greater discipline to the procurement process, including creating panels to block unnecessary changes to program requirements.

Mr. Young also said he was pushing the military to look for other ways to save money, including by buying weapons at the most efficient annual rate to lower overall costs and by testing more prototypes before beginning production.

But lawmakers said that more changes were necessary. Senator Joseph I. Lieberman, independent of Connecticut, called the Pentagon’s record on acquisition “exasperating and embarrassing, and ultimately very harmful to our attempts to provide for our national security.”

Correction: June 26, 2008

Because of an editing error, an article on Wednesday about the Pentagon’s loss of engineering-management expertise overstated the percentage increase in projected cost overruns for 95 major weapons programs in 2007 and 75 projects in 2000. A $295 billion overrun projected for 2007 was 26 percent above initial estimates, not 40 percent. And a $42 billion estimated overrun in 2000 was 6 percent over budget, not 27 percent. (The 40 percent and 27 percent increases were for cost overruns in the projects’ research and development in 2007 and 2000, respectively.) The incorrect percentages also appeared in an article on June 4 about a senator’s criticism of the cost overruns.

A version of this article appears in print on , on page A16 of the New York edition with the headline: Senator Warns of a ‘Crisis’ In Pentagon Cost Overruns. Order Reprints|Today's Paper|Subscribe